In this letter, the impact of fiber chromatic dispersion of the tested fiber on the performance of chaotic optical time-domain reflectometer (COTDR) is studied. We find that fiber dispersion will limit the dynamic range of COTDR and, hence, deteriorate the system performance considerably. Simple dispersion compensation can improve the performance of COTDR remarkably. Moreover, we show that this improvement is more pronounced for the COTDR with broader bandwidth. Our experimental results show that for the COTDR with 3.5-GHz bandwidth (3-dB bandwidth), a 1.7-dB improvement of the dynamic range can be observed when using dispersion compensation, whereas for the COTDR with 7.6-GHz bandwidth, this improvement of the dynamic range, coming from dispersion compensation, will increase to 3.4 dB.Index Terms-Fiber fault detection, chaotic optical time-domain reflectometer (COTDR), chromatic dispersion, bandwidth.